Total annual sales of €1,731.9 million, up 18.6% year on year, outstripping target of around €1,640.0 million.
Continued excellent execution across the board:
Far Cry® 5: Ubisoft’s second biggest release ever with USD 310 million total players spending in the release week[1]
Assassin’s Creed® Origins: record performance for an Assassin’s Creed game in a fourth fiscal quarter
Tom Clancy’s Rainbow Six® Siege: more than 30 million registered players, record engagement in fourth-quarter 2017-18 and esports viewership up by approximately 300.0% for the Six Invitational[2]
Tom Clancy’s The Division®: more than 20 million registered players
Tom Clancy’s Ghost Recon® Wildlands: more than 10 million registered players
Record peak concurrent users for the Group in fourth-quarter 2017-18
Annual digital revenue up 37.8% to €1,004.7 million (representing 58.0% of total sales versus 50.0% for the previous fiscal year)
Sharp increase in PRI[3]: up 58.7% to €482.5 million (27.9% of total sales against 20.8% in 2016-17)
Mobile revenue up 66.2%
Annual back-catalog sales up 27.2% to €826.0 million (47.7% of total sales compared with 44.5% in 2016-17), confirming the increasingly recurring profile of the Group’s business.
Non-IFRS operating income up 26.2% to €300.1 million, exceeding target of €270.0 million.
Non-IFRS operating margin reaches a record high at 17.3% (16.3% in 2016-17)

TARGETS FOR 2018-19: THE GROUP IS STANDING BY ITS TARGETS FOR NON-IFRS OPERATING INCOME AND FREE CASH FLOW

PARIS - May 17, 2018 – Today, Ubisoft released its sales and earnings figures for the fiscal year ended March 31, 2018.

Yves Guillemot, Co-Founder and Chief Executive Officer stated, “Ubisoft ended the fiscal year on a very positive note, with continued excellent execution across the board. The Group further strengthened its brands thanks to the quality of its games, strong live services and a deep commitment to player communities. During the fourth quarter, we reached a record of peak concurrent users thanks to record engagement levels and esports viewership for Rainbow Six Siege, the successful launch of Far Cry 5 – the second biggest launch in Ubisoft’s history – and continued strong performance by Assassin’s Creed Origins, Mario + Rabbids: Kingdom Battle and our back-catalog titles. As a result, we have outperformed our financial targets, with record-high sales, digital and back-catalog revenues, and profitability.

In the short and medium term, Ubisoft has many growth opportunities to tap and expects further profitability increases. Our digital transformation is progressing at a faster pace than we anticipated. Our potential in the PC and mobile markets is massive, notably in China. Finally, we are continuing to develop and structure our esports offering, which represents a significant opportunity.

Over the longer term, new forms of gaming, enabled notably by streaming, will allow our brands to reach a much wider audience. Consequently, we are investing in our online services platform – which boasted 88 million unique active players[4] – as well as in artificial intelligence in order to better tailor the game experience to each player’s profile and therefore offer them ever-richer experiences.”

Note

Unless stated otherwise, all of the figures in this press release correspond to non-IFRS data, adjusted to exclude non-operating items. The Group presents these indicators – which are not prepared strictly in accordance with IFRS – as it considers that they are the best reflection of its operating and financial performance. The definitions of the non-IFRS indicators with a description of the applicable adjustments, as well as a reconciliation table between the IFRS consolidated income statement and the non-IFRS consolidated income statement are provided in an appendix to this press release.

Income statement and key financial data

In € millions

2017-18

%

2016-17

%

IFRS Sales

1,731.9

1,459.9

IFRS Gross margin

1,435.1

82.9%

1,189.0

81.4%

Non-IFRS R&D expenses

(661.1)

(38.2)%

(521.7)

(35.7)%

Non-IFRS selling expenses

(335.9)

(19.4)%

(313.1)

(21.4)%

Non-IFRS G&A expenses

(138.0)

(8.0)%

(116.4)

(8.0)%

Total non-IFRS SG&A expenses

(473.9)

(27.4)%

(429.5)

(29.4)%

Non-IFRS operating income

300.1

17.3%

237.7

16.3%

IFRS operating income

222.3

175.8

Non-IFRS diluted EPS (in €)

1.80

1.46

IFRS diluted EPS (in €)

1.18

0.92

Non-IFRS cash flows from operating activities*

169.9

149.1

R&D investment expenditure**

720.2

610.5

Net cash/(debt) position

(548.1)

(80.4)

* Based on the consolidated cash flow statement for comparison with other industry players (not audited)

** Including royalties but excluding future commitments

Sales

Full-year sales for 2017-18 came to €1,731.9 million, outstripping the Group’s target of around €1,640.0 million and up €18.6% (or 22.9% at constant exchange rates[5]) compared with the €1,459.9 million recorded for 2016-17.

Sales in the fourth quarter of 2017-18 – a period that saw the release of one major game, Far Cry 5 – totaled €540.7 million, exceeding the target of approximately €449.0 million. This fourth-quarter sales figure represents a 16.6% decrease (or 11.2% at constant exchange rates5) versus the €648.6 million recorded for the same period of 2016-17, when two major games were released (Ghost Recon Wildlands and For Honor®).

Main income statement items[6]

Gross margin rose to 82.9% of sales and €1,435.1 million in absolute value terms (compared with 81.4% and €1,189.0 million in 2016-17).

Non-IFRS operating income came in at €300.1 million, up 26.2% on the €237.7 million recorded for 2016-17.

Non-IFRS net income came in at €220.6 million, representing non-IFRS diluted earnings per share ("EPS") of €1.80, compared with non-IFRS net income of €174.3 million and non-IFRS diluted EPS of €1.46 for 2016-17.

IFRS net income for 2017-18 came to €139.5 million, representing IFRS diluted EPS of €1.18 versus IFRS net income of €107.8 million and IFRS diluted EPS of €0.92 in 2016-17.

Main cash flow statement[7] and balance sheet items

Non-IFRS cash flows from operating activities represented a net inflow of €169.9 million against €149.1 million in 2016-17. This increase reflects higher non-IFRS cash flow from operations (€214.9 million versus €110.2 million in 2016-17) and a €45.0 million increase in non-IFRS working capital requirement (€38.9 million decrease in 2016-17).

At March 31, 2018, Ubisoft had net debt7 of €548.1 million versus €80.4 million one year earlier. This rise mainly reflects the purchases and binding purchase commitments of own shares for €411.5 million during the fiscal year and a €100 million deposit related to a total return swap with settlement at maturity for part of the share previously owned by Vivendi. As a reminder the Company free cash flow target stands at around €300.0 million in 2018-19.

Outlook

Full-year 2018-19

Ubisoft is standing by its 2018-19 targets for non-IFRS operating income and free cash flow. As announced on May 9, 2018, in line with the recommendations of the European regulators (ESMA) and the French Financial Markets Authority (AMF), Ubisoft is today introducing a new target for sales calculated in accordance with IFRS 15 as well as a new indicator called “Net Bookings” which corresponds to its sales figure as calculated prior to the Company's application of IFRS 15 (see Press Release in appendices:

IFRS 15 sales of around €2,000.0 million[8]
Net bookings of approximately €2,050.0 million compared with the previous target of €2,100.0 million, calculated based on:
The release of three new AAA games (The Crew® 2, Tom Clancy’s The Division® 2 and an unannounced franchise title) representing 19 million units (vs the four AAA releases and 23 million units previously announced). In line with previous practices and in view of the acceleration of our digital transformation, growth in back-catalog sales and excellent momentum of recent releases, Ubisoft has decided to give itself more time to develop Skull & BonesTM to offer players an even more engaging experience. Skull & Bones is now scheduled for release in 2019-20.
Digital revenue is expected to represent around 65% of net bookings (compared with approximately 60% previously) and PRI should represent around 30% of net bookings (versus the previous target of over 25%).
Back-catalog sales are forecasted to represent approximately 50% of net bookings (versus the previous target of over 45%).
Non-IFRS operating income (based on net bookings) of around €440.0 million.
Free cash flow of approximately €300.0 million.
First-quarter 2018-19

For first-quarter 2018-19, the Group expects IFRS 15 sales to amount to around €350.0 million8 and net bookings to total approximately €350.0 million (compared with €202.0 million for the same period of 2017-18).

Recent significant events

Sale of Vivendi’s entire stake in Ubisoft, with the transaction structured as follows:

New long-term investors in Ubisoft, with Ontario Teachers’ Pension Plan and Tencent acquiring 3,787,878 and 5,591,469 Ubisoft shares respectively.
Share buybacks by Ubisoft: Ubisoft has undertaken to buy back 7,590,909 of its own shares from Vivendi through a structured transaction taking the form of (i) a forward sale of Ubisoft shares by Vivendi to Crédit Agricole Corporate and Investment Bank (CACIB), and (ii) a mechanism involving Ubisoft's forward buyback of its own shares from CACIB, enabling Ubisoft to defer its buybacks over the period from 2018 to 2021.
Purchase of Ubisoft shares by Guillemot Brothers SE: Guillemot Brothers SE has undertaken to purchase 3,030,303 Ubisoft shares.
An accelerated private placement of 13,376,620 Ubisoft shares among qualified investors.

Signature of a strategic partnership agreement with Tencent: Ubisoft has signed a strategic partnership agreement with Tencent which will increase Ubisoft games’ exposure and engagement in China and enable the Company to reach millions of new players on mobile and PC.

Acquisition of 1492 Studio, a game development studio specialized in the development of free-to-play episodic and interactive stories on mobile.

Acquisition of Blue Mammoth Games, a game development studio specialized in free-to-play multi-player games on PC and the PS4.

Announcement of new studios openings in India, Ukraine and Canada: The Mumbai and Odessa studios will be focused on jointly developing AAA games and post-release game support. The Winnipeg studio will play a strategic role in jointly developing AAA titles and will be dedicated to developing tools and technology.

Disclaimer

This statement may contain estimated financial data, information on future projects and transactions and future business results/performance. Such forward-looking data are provided for estimation purposes only. They are subject to market risks and uncertainties and may vary significantly compared with the actual results that will be published. The estimated financial data have been presented and approved by the Board of Directors on 05/17/18 and have not been audited by the Statutory Auditors. (Additional information is specified in the most recent Ubisoft Registration Document filed on July 21, 2017 with the French Financial Markets Authority (l’Autorité des Marchés Financiers)).

About Ubisoft

Ubisoft is a leading creator, publisher and distributor of interactive entertainment and services, with a rich portfolio of world-renowned brands, including Assassin’s Creed, Just Dance, Watch_Dogs, Tom Clancy’s video game series, Rayman and Far Cry. The teams throughout Ubisoft’s worldwide network of studios and business offices are committed to delivering original and memorable gaming experiences across all popular platforms, including consoles, mobile phones, tablets and PCs. For the 2017-18 fiscal year Ubisoft generated sales of €1,732 million. To learn more, please visit www.ubisoftgroup.com